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Lenovo, the world’s third-biggest personal computer maker, is to cut 5 per cent of its workforce as it seeks to trim costs after buying IBM’s PC business.

Lenovo said the cuts would save the company $250m a year in labour costs. They come as the Chinese computer group prepares to spend $100m to restructure its US operations.

William Amielo, Lenovo’s chief executive, said the company would plough the savings into programmes to “help Lenovo combat competitive pressures around the world and leverage our new products and brand recognition.”

Falling prices of computer equipment have sparked fierce competition in the PC sector, as older US computer makers such as Dell and Hewlett-Packard square off in a battle for market share against Asian upstarts such as Lenovo and Acer of Taiwan.

Lenovo became the world’s third-biggest computer maker last year when it bought IBM’s PC business for $1.3bn.

Since then it has been trying to gain a foothold in growing markets overseas.

In February, the company began shipping Lenovo-branded PCs outside of China for the first time, to capture a bigger share of the fast-growing market for desktops and notebooks.

The PC business it acquired from IBM was mainly focused on selling to big corporations.

The computer maker reported weaker than expected results for the December quarter. Although sales jumped almost 400 per cent as a result of the IBM acquisition, net income growth failed to match analysts’ expectations as the company reported a decline in margins.

Lenovo also said it would move its US headquarters to Raleigh, North Carolina from Westchester County, New York.

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